Early reports suggest that Groupon will be valued at around $12bn when its shares go on the public market today.

This is higher than the $6bn offer they got from Google around a year ago that they famously turned down. It is also much lower than the earlier forecasts, fuelled by their CEO Andrew Mason, that were in the region of $25bn.

Some people are suggesting that the lower valuation is now a good buy and apparently demand for shares is high. I think this is at least in part down to the pent up demand to buy into any social network type companies and I have to say that I have some real concerns about the future of this business.

First, Groupon has been growing amazingly quickly. In just three years their revenues will be more than $1bn for 2011 and they have assembled a global workforce of 10,500 people. This makes Groupon quite simply the fastest growing company ever based on these measures.

In some ways this has to be seen as a really positive thing. If a company can achieve this in three years then surely the sky is the limit moving forward as a public company?

I’m not so sure. The revenue growth has been jet propelled by huge sales and marketing budgets and I really don’t think this is sustainable. Indeed their latest figures suggest their revenue growth is already slowing. They greatly reduced the marketing spend in the last quarter mainly it seems to reassure investors that they could bring costs under control. But if that means growth slows then you have to ask the question – is Groupon’s amazing growth only sustainable by spending huge amounts on marketing therefore calling into question whether the business can actually make any money? It seems either growth will slow or the business will remain a long way away from making a profit and yet investors will demand both over time.